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Chapter Four Conceptual and Judicial Praxis of the Indirect (Circumstancial) Evidence in the EU Competition Law, the German Cartel Law and the Law Number 5/1999 in:

Dian Parluhutan

The Implementation of Circumstancial Evidence pursuant to the European Union Competition Law, the German Cartel Law and the Indonesian Competition Law, page 245 - 292

1. Edition 2019, ISBN print: 978-3-8288-4127-7, ISBN online: 978-3-8288-7337-7, https://doi.org/10.5771/9783828873377-245

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Conceptual and Judicial Praxis of the Indirect (Circumstancial) Evidence in the EU Competition Law, the German Cartel Law and the Law Number 5/1999 Introduction According to Silalahi, the Competition Authorities would, in the majority of antitrust cases, encounter profound difficulties in order to uncover, deter and thus prosecute cartel infringements, because cartels involve various forms of agreement, arrangement or practices between the undertakings to eliminate and subvert the competition processes on the market. Altough cartels occur secretively, they cause detrimental effects, which are perceivable by consumers, for instance prices’ increases of products ultimately reducing the consumers’ welfare.842 Equally important, Ruky emphasises that cartels are the most dangerous infringement against competition law, compared to other violations. In fact, the Competition Authority (CA) faces an intensive enigma as to ‘who commits cartels and what types of cartels occur?’843 Likewise, Beaton-Wells, et.al, explain that difficulties in detecting, prosecuting and deterring cartels violations rest upon the fact that cartels infringement frequently involve so-called ‘multiple-cheatings’. Put differently, the undertakings participating in cartels (cartelists) initially cheat the Competition Authorithy by presenting themselves as competitors, but in fact they do not compete each other. Thus, the undertakings participating in cartels cheat other competitors, consumers Chapter Four 4.1 842 Silalahi, ‘Circumstantial Evidence’ (n 14) 2–5. 843 Ruky, ‘Economic Evidence’ (n 16) 1–4. 245 and public as well (first-level cheating). Subsequently, the cartelists cheat the operation of cartels, secretly operate against the agreement not to compete when it may be to their economic advantage to initiate competition again, thus cheating between the cartelists (second-level cheating). Afterwards, the ex-cartelists who act as the ‘whistle-blowers’ and informants to the CA in the Leniency program, cheat the other cartelists by deserting to the law enforcement authorities (third-level cheating). Eventually, the former cartelists who act as the ‘whistleblower’ and informants to the Competition Authority (CA), cheat the law enforcement officials by not giving the evidences optimally (fourth level cheating).844 Moreover, Heineman maintains that the access to evidences were a main problematic matter in the competition law enforcement.845 Accordingly, cartels practices are therefore difficult to uncover due to its secretive nature and lack of availability of evidences. In fact, according to Andrews, the harder the CA investigate cartels, the craftier the undertakings can commit cartels.846 In the second place, according to Silalahi cartels frequently occur in an oligopolistic market due to characteristics thereof. Therefore, Jones and Sufrin are of opinion that in an oligopolistic market, both of cartels (explicit collusion) and tacit collusion could emerge consecutively.847 For that reason, Silalahi emphasizes that the undertakings operating in an oligopolistic market are subject to the oligopolistic interdependences (conscious parallelism).848 Hence, Kerber and Schwalbe describe that these oligopolistic interdependences between undertakings had been derived from and could be explained by the game-theory approach.849 Indeed, Jones and Sufrin explain that based upon the economic theory, the undertakings in an oligopolistic market would recognize the profitability of their conduct (behavior) will depend to the other competitors’ conduct (behaviour) in a market. Put differently, they would be better-off if they impose higher prices and obtain higher profits. Thus, 844 Beaton-Wells and Tran (eds) Anti-Cartel Enforcement in a Contemporary Age (n 721) 249. 845 Heinemann, ‘Accesss to Evidence and Presumptions (n 722) 167–170. 846 Ruky, ‘Economic Evidence’ (n 16) 3. 847 Jones and Surfin, EU Competition Law (n 46) 510–512 848 Silalahi, Circumstantial Evidence‘ (n 14) 2–3. 849 Kerber and Schwalbe, in Säcker, et.al, Europäisches Wettbewerbsrecht (n 13) 116–117. Chapter Four Conceptual and Judicial Praxis 246 they could coordinate their conduct (behaviour) in a similar way to those committing cartels infringement, without an explicit collusive agreement.850 Posner categorizes such behavioural interdependencies on the markets as ‘tacit collusion’.851 Thereby, Silalahi suggests that the Competition Authorithy (CA) requires not only the direct evidence, but also the indirect (circumstantial) evidence in order to substantiate cartels infringement, notably in an oligopolistic market.852 In addition, Ruky reiterates that the substantiation of cartels existence in the market prerequisites a particular evidentiary instrument, namely the economic evidence.853 As a matter of fact, according to the the Organization for Economic Cooperation and Development (OECD), within the cartels prohibition enforcement proceedings, the CA shall employ two types of evidences: First, the direct evidence, which refers to the evidence that identifies a meeting or communication between the subjects and describes the substance of their agreement. The most common form of direct evidences are: 1) documents (in printed or electronic form) identifying an agreement and the parties to it, and oral or written statements by co-operative cartel participants describing the operation of the cartel.854 Second, the indirect (circumstantial) evidence. Circumstantial evidence is the evidence that does not specifically describe the terms of an agreement, or the parties to it. It includes evidence of communications among suspected cartel operators and economic evidence concerning the market and the conduct of those participating in it that suggest concerted action.855 Equally important, in the EU Competition Law, according to the Commission, the indirect (circumstantial) evidence is defined as follows: “the notion of indirect or circumstantial evidence comprises of evidences which is appropriate to corroborate the proof of the existence of cartels by 850 Jones and Surfin, EU Competition Law (n 450) 534–540. 851 Posner, Antitrust Law (n 80) 53 852 Silalahi, ‘Circusmtantial Evidence’ (n 14) 2–5. 853 Ruky, ‘Economic Evidence’ (n 16) 3. 854 OECD, ‘Prosecuting Cartel without Direct Evidence of Agreement’ (n 19) 2–5. 855 ibid. 4.1 Introduction 247 way of deduction, common sense, economic analysis or logical inference from the demonstrated facts.”856 Judicial Praxis concerning the Indirect (Circumstantial) Evidence In the European Competition and the German Cartel Laws Henceforth, this section analyses the landmark of judicial decisions on antitrust cases, up to the writing of this work, concerning the implementation of indirect (circumstantial) evidences in the practice of the European Competition and the German Cartel Laws. Due to the principle of the ‘full and direct effect’ of the EU Competition laws in accordance to the Articles 101 and 102 TFEU, Article 6 of the Regulation 1/2003, and the Sec. 2 of GWB concerning the relationship between German Cartel Law and Articles 101 and 102 TFEU, hence this section will analyse the judicial practices in European Courts and in the German Courts consecutively.857 Bayer AG v Commission of the European Communities-Bayer Adalat Case (ECJ Joined Cases C-2/01 P and C-3/01 P) 858 In a landmark judgment, the Court of Justice (ECJ) conforming the previous GC’s decision, which examined whether a unilateral policy of Bayer manufacturer toward the Spanish and French wholesalers to prevent parallel imports of the cardiovascular Adalat into the UK can be deemed as the agreement under Article 81 (1) EC [now Article 101 (1) TFEU]. Case Facts: During 1989–1993 there were wide price differences of the medical products to treat the cardiovascular-illness name Adalat (Adalate) produced by the Bayer Group, a pharmacy company having representatives in all European Community Member States, namely in France and in Spain. For example, in Spain the wide price differences 4.2 4.2.1 4.2.1.1 856 ibid. 857 de Bronett, Europäisches Kartellverfahrensrecht (n 529) 105–109. 858 Case T-41/96 Bayer AG v Commission of the European Communities. See also Jones and B. Sufrin, EU Competition Law (n 46) 150–152. Chapter Four Conceptual and Judicial Praxis 248 of -35 until 47% less than in the UK and in Spain 24% less than France. Those wide price differences of about 40% led Spanish wholesalers (from 1989) and French wholesalers (from 1991) to export a large quantity of that medicinal product to the United Kingdom. Additionally, Bayer had a system for identifying the exporting wholesalers in France and Spain. However, according to report of the Association of the British Pharmaceutical Industry of 1989 which stated the overall effects of parallel imports on the UK economy are harmful. Direct estimates of the value of domestic sales lost to parallel imports by UK manufactures in 1987/1988 was GBP 350, s. Moreover, in 1992 the Report of Bayer an estimated loss to the UK market through parallel imports would be GBP 1.4, if total free trade and unlimited supply in low cost countries. Therefore, Bayer wanted to inhibit or to block parallel imports into the UK from mainly Spain and France and thus Bayer had the power to impose that measure consistently to its French and Spanish wholesalers. In addition, Bayer France and Spain imposed this blocking of parallel imports to their wholesalers namely through the permanent threat of reducing quantities supplied, so they advised their costumers as follow: “Apologize for being unable to supply to your company your order. The reason is that the laboratory that produces it (Bayer) does not deliver to us the quantities we ordered because they want to avoid any kind of export of this product and then, they deliver only the quantity that estimate we need for the internal market” Thus this export ban became an integral aspect in the continuous commercial relations between the parties, namely Bayer and the wholesalers in France and Spain. Accordingly, the conduct of the wholesalers in France and in Spain showed that they not only understood the existence of the export ban applied by Bayer, but also, they aligned their commercial conduct on this export ban imposed by Bayer. However, in January 1996 due to repetitious complaints by the wholesalers in France and Spain, the Commission adopted a decision requiring Bayer to change its policy deemed contrary to Article 8181) EC and fined Bayer 3 million Euros. However, in 2000 the Court of First Instance (CFI) annulled the Commission’s decision (Case T-41/96) stating that: “The CFI found that the Commission had not proved that there was an "agreement" within the meaning of Article 81(1) between Bayer and its 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 249 Spanish and French wholesalers to limit parallel exports of Adalat to the United Kingdom.” Furthermore, CFI stated: “An agreement centres around the existence of a concurrence of wills between at least two parties, the form in which it is manifested is unimportant so long as it constitutes the faithful expression of the parties’ intention.” Decision: On 6th January 2004 the ECJ ruled its final decision that there was no evidence for the Commission’s finding in 1996 that Bayer had infringed Article 81 EC [Article 101 TFEU] Furthermore, the ECJ has spelled out its ratio decidendi supporting this decision, as follows: First, the Court of Justice recognised that when a decision of a manufacturer, Bayer, constitutes unilateral action, namely by restricting supplies to distributors thus impedes parallel trade between the Member States, that decision escapes [Article 101 (1) TFEU] and did not infringed the EU competition law prohibition. Second, the concept of agreement within the meaning of Article 101 (1) TFEU, as interpreted by case-laws of the Court, ”centres around the existence of a concurrence of wills between at least two parties, the form in which it is manifested being unimportant so long as it constitutes the faithful expression of the parties’ intention.” Third, the Court rebutted the Commission’s Decision which stated that merely the continuous commercial relations between the manufacturer, the wholesalers and the dealers, following a unilateral decision of the manufacturer, will constitute an agreement within the meaning of [Article 101(1) TFEU]. Ahlström Osakeyhtiö and others v Commission (Woodpulp Case) (Joined Cases C-89/85, C-104/85, C-114/85, C-116/85, C-117/85 and C-125/85 to C-129/85, 31 March 1993)859 In this landmark case the Court of Justice elaborated and examined the Commissions’ finding based upon investigations over the woodpulp producers and trade associations for allegedly committing concerted practices to fix the prices, which was contrary to Article 85(1) EEC Treaty [Now Article 101 (1) TFEU]. While there was no evidence 4.2.1.2 859 Kokkoris, Competition cases from the European Union (n 460) 10–12. Chapter Four Conceptual and Judicial Praxis 250 of expressed agreements, the Commission based its allegation upon the several indirect evidences. Furthermore, the Court also examined the jurisdictional question of EU Competition law and adoption of an effect test basis for applying Article 85 EEC Treaty [Now Article 101 (1) TFEU] to the parties abroad. Case Facts: Prior to 1984, several Finnish, American, Swedish and Canadian companies and trade associations, engaging in woodpulp productions, established outside the EC jurisdiction, a price cartel, which will eventually cause detriment effects to their customers in the EC. The Commission found that at least 40 producers of bleached sulfate wood pulp used in paper manufacturing and 3 of their trade associations had committed a concerted practice. This collusion had manifested in the continuous parallel pricing of the woodpulp products. During the investigation the Commission had found that there had been a direct and indirect exchange of information between the woodpulp producers and the trade associations. This periodical information exchange comprises: First, a system of quarterly public price announcements by a substantial number of producers to the trade press or sales agents whereby “the producer could expect that the prices he announced would immediately reach his competitors, just as he himself would expect to be given details in the way of his competitor’s prices.” The fact that prices were published well in advance gave other producers ‘adequate lead time’ to announce their own corresponding new prices and apply them from the start of the quarter. Second, the information exchanges on prices were conducted at meetings and through faxes between several producers. Third, there had been information exchanges on prices between U.S producers within the two trade associations, in which the Commission considered as an independent infringement of EC competition law. Furthermore, according to the Commission’s view these exchanges of information caused the parallel pricing leading to anti-competitive effects in the relevant market. However, this parallel pricing was not explainable by the market’s structure because the market was not particularly concentrated and there was no market leader setting the price for others to follow. Accordingly, the Commission decided on 19th December 1984 that these woodpulp producers and trade association, which covered 60 % of the total market share, had infringed [Article 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 251 101 TFEU] due to the alleged concerted practice and thus imposed fines in amount of ECU 50,000,00 to ECU 500,000,00 upon them. Consequently, a number of woodpulp producers opposed the Commission’s Decision and brought the Decision on appeal to the ECJ for more elaborative analysis on several factors related to the alleged concerted practice. Decision: The ECJ reversed the Commission’s Decision upon the appeal by the alleged companies. On the first step, the Court stated in this factual case that ‘each economic operator must determine independently the policy which he intends to adopt […].’ Subsequently, the Court ruled that the communications to users “constitute in themselves market behaviour which does not lessen each undertaking’s uncertainty as to the future attitude of its competitors. At the time when each undertaking engages in such behaviour, it cannot be sure of the future conduct of others”. The Court therefore found the system of announcing prices on a quarterly basis, did not amount to an infringement of [Article 101 (1) TFEU]. The Court, based on the expert opinions, confirmed that the announcement system was a commercial requirement in the relevant market. Moreover, the Court opined that as woodpulp accounted for up to three-quarters of the customers’ input costs, the purchasers desired to ascertain their future costs immediately, in order to minimalise commercial risks. Furthermore, the Court held the opinion that the system of quarterly public price announcements by a substantial number of woodpulp producers per se was not contrary to [Article 101 (1) TFEU] because the producer could not ascertain that other competitors will follow. In contrast to other most organised cartels, in this case the allegation was “market behaviour which does not lessen each undertaking’s uncertainty as to the future attitude of its competitors”. In general, the Court ruled that the Commission had failed to provide sufficient evidences to rule out other plausible explanations for the parallel pricing. This Court’s final ruling was founded among others upon following reasons: First, the system of quarterly prices announcements had to a large extent the legitimate purpose of giving customers relevant information for the forthcoming transactions in the woodpulp market. Second, the parallel timing of prices announcements could simply have resulted from the natural transparency in the woodpulp market, which is characterised by the Chapter Four Conceptual and Judicial Praxis 252 free-flowing information exchanges, as buyers informed each other about prices and several agents act on behalf of other producers. Third, the Court based on further examination, found the relevant woodpulp markets were more oligopolistic that the Commission had believed, whereby this market structure provided a further explanation for the parallel prices and trends in the respective woodpulp market. Toshiba Corp. v European Union Commission (Gas Insulated Switchgear-GIS Cartel (ECJ Case C-180/16 P) In this case the European Commission adopted a Prohibiting Decision against corporations engaging in the Gas Insulated Switschgear (GIS) for conducting cartel practices, which consisted principally of market allocation, customer allocation and bid rigging for public tenders and thus infringing Article 101(1) TFEU. In this chief decision the Commission and later the Courts tried to proof the unwritten complex agreement and the concerted practice by employing the direct and circumstantial evidences as well as the implementation of the Leniency programme.860 Case Facts: As of 1989 for about 16 years, approximately 20 companies, mainly Siemens, Alstom, Areva, and two Japanese corporations, participated in cartel practices on the market for gas insulated switchgear (GIS). GIS is a major component to control energy flow in electricity grids and is sold globally as a component for turnkey power stations or as separate equipment for a turnkey power substation. Based on the so-called ‘GQ Agreement’ signed in Vienna on 15th April 1988, the ‘E-Group Operation Agreement for GQ Agreement’ followed by an unwritten agreement or ‘the common understanding’ these alleged undertakings committed a series of secretive measures, for instance: coding the names for the involving cartel companies and individuals as well as using anonymous e-mail addresses to conduct the following cartel practices: (1) sharing the GIS markets in Europe and 4.2.1.3 860 M L T Centella ‘Indirect Evidence of a Cartel in the GIS Judgments Saga’ (Journal of European Competition Law & Practice, Volume 3/ Issue 3, 2012) 258–260. cf. D. Bailey, ‘Gas Insulated Switchgear’ (Presentation Paper for the Workshop Milestone Judgement in Competition Law, States Network for Economic Development in collaboration with the Barbados Fair Trading, 30–31 July 2012). 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 253 Japan; (2) allocating quotas and maintaining historic market shares; (3) doing collusive tendering; (4) exchanging the sensitive market information in the GIS market in Europe and in Japan. However, in March 2004 ABB Ltd, one of the cartel participants, based on its initiative informed the European Commission about the existing cartel practices through the concerted practices in the respective GIS sector through an oral application and at the same time applying for immunity from fines pursuant to the Commission Notice of 19th February 2002 on Immunity from Fines and Reduction of Fines in Cartel cases (“the Leniency Notice”). Accordingly, the Commission sent the Statement of Objections to the alleged 20 companies for infringing the cartel prohibition pursuant to Article 101(1) TFEU and thus levied fines either individually or jointly and severally to each cartel participant, whereby the largest fines, in amount of € 396,562,500, was imposed on Siemens AG, as a cartelist’s secretary. However, the Commission’s Decision was appealed by the affected companies to the General Court, inter alia due to the excessive or unjustified fines imposed and insufficient evidences to confirm the involvement of the companies in the cartel practices. Decision: Before the General Court there were three legal issues which must be examined and decided, which are: First, what is the correct approach to evidentiary requirements in a cartel infringement. Second, whether the Japanese companies factually participated in the concerted practices, notably through sharing the market of GIS. Third, whether the fines imposed by the Commission had been correct and fair. With regard to the first question, the General Court stated its arguments from paragraph 75 until 89, as follows: Firstly, the evidences in substantiating cartel infringement must be “precise and consistent” and must be evaluated based on the reliability principle, particularly “[…] the GQ Agreement cannot be regarded as constituting documentary evidence of the existence of a common understanding between the companies”. Secondly, to proof a cartel infringement the Commission can use the leniency materials provided the causality between the facts is fulfilled. Thirdly, the General Court ruled the judgment: “the Commission cannot be required to produce documents expressly attesting to contacts between the traders concerned […]. The existence of an anticompetitive practice or agreement may therefore be inferred from a number Chapter Four Conceptual and Judicial Praxis 254 of coincidences and indicia which, taken together, can, in the absence of another plausible explanation, constitute evidence of an infringement of the competition rules.” Moreover, as regards the allegation of Japanese companies participating in the concerted practices in GIS markets in Japan and Europe, the General Court ruled its judgement: “The existence of a mutual agreement necessarily implies the existence of a meeting of minds, even if there is no evidence which makes it possible to determine with precision the exact point in time that meeting of minds was manifested […] the content of that understanding was understood, accepted and implemented by all the participants to the cartel without the need for any specific discussion on it.” (para. 231) Gemeinschaftsunternehmen für Mineralölprodukte (Texaco-Zerssen) [Bundesgerichtshof Kartellsenat, KVR 3/82, 04.10.1983)861 In this landmark case-law concerning cartels’ practice within the oligopolistic market, the German courts establish mainly three guiding principles, which have been inferred from Sec. 22 para.2 of the Act against Restraints of Competition, which are as follows: First, the determination of oligopoly power in the relevant market according to Sec.22 para.2 of the Act against Restraint of Competition, regardless of the presumption of market dominance, shall take into considerations: the number of firms engaging in the relevant market, the factual structures of market and competition relations between the firms in an oligopoly market. Second, for the purpose of assessment or determination, whether between the firms in an oligopolistic market exists functionable competitions therein, prerequisites comprehensive analysis pertaining not only the structural requirements of competition but also competition relations between firms within the relevant market. Third, whenever in an oligopolistic market not all of the competition instruments had been employed, thus this requires that the existing competition between firms would have appreciable intensity and significance for the relevant market. Accordingly, the existing competi- 4.2.1.4 861 F. J. Säcker and K. Boesche‚‘Vertikale Fusionen im Energiesektor gefährden wirksamen Wettbewerb‘ BB 2001 2329–2237 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 255 tions between firms could create a functionable competition in an oligopoly market. Circumstance of the Case In this leading case-law, the Kartellgericht (KG) had adjudicated case concerning prohibition decision by the Bundeskartellamt against a merger or fusion plan by the undertakings, which engaged in the mineral and petroleum industry. However, the alleged undertakings filed a law objection against the prohibition. The Court (KG) decided in favour of the undertakings. The Bundeskartellamt thus subsequently posed a law objection against the Court’s decision, which was later refused. Adjudication of the Court The adjudicating Court, the Kartellgericht (KG), was of the opinion that for the appropriate assessment and application of the market dominant oligopoly in accordance to Sec.22 para. 2 of the GWB in the mineral and petroleum sector, not only the numbers of undertakings that are active in the market should be considered, but also the factual market structural requirements as well as competition relationships between the firms in the relevant market. Furthermore, the adjudicating Court (KG) argued that for the examination of corporate fusions, which could change the structure of competitions requirements due to corporate concentration, the examination of relevant market structures would become the primary parameter; that is to say to determine whether there were significant competitions between undertakings in an oligopolistic market. Consequently, the competition authority shall take into considerations whole relevant circumstances, particularly the competition relations which actually work in the relevant market. Particularly important is the assessment in the market of a homogenous product, which has none of competition in terms of prices and qualities. As regards to the determination of restriction of compe- Chapter Four Conceptual and Judicial Praxis 256 tition, the Court and the Bundeskartellamt (FCO) should carry out comprehensive and elaborative analysis as to the impacts of market structures as well as the competition relations between undertakings within the relevant market. Total/OMV Tankstelle The German Supreme Court Decision (Bundesgerichtshof Beschluss vom 6. Dezember 2011 – KVR 95/10)862 On 26th May 2011, the Bundeskartellamt (Federal Cartel Office) published the final report on its sector inquiry into competition for the German fuel market. The sector inquiry describes several important aspects:863 First, whether the five leading fuel suppliers (BP, Shell, ConocoPhillips, ExxonMobil, and Total) hold collectively dominant position on several regional markets for the retail sale of fuel (thorough petrol stations) in Germany, and whether retail fuel prices in Germany were accordingly higher than necessary. The principal conclusions in this report is that the five integrated oil majors, which together account for nearly of 65% of fuel sales in Germany, as holding a collectively dominant position on several regional retail fuel markets. It therefore disagrees with the Appeal Court, which found that the FCOs’ decision cannot reasonably be accepted. The FCO, however, will continue its decisional practice based upon this report, provided the Bundesgerichtshof (Federal Court of Justice) decides conversely. Second, the FCO is of the opinion that there was no effective internal competition in the oligopolistic fuel market, partly due to high market transparency. Furthermore, this market transparency is further increased by the suppliers’ operation of a comprehensive price monitoring system, by vertical integration of the fuel suppliers (which operate both refineries and petrol stations) and by the national-wide presence, which enables the undertakings to observe price changes and 4.2.1.5 862 Bundesgerichtshof ‹http://juris.bundesgerichtshof.de/cgi-bin/rechtsprechung/doc ument.py?Gericht=bgh&Art=en&nr=60376&pos=0&anz=1› accessed on 5th January 2019. 863 Bundeskartellamt, Sektoruntersuchung Kraftstoffe (B8–200/09) Abschlussbericht Mai 2011. 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 257 thus to react promptly. Moreover, the existence of an effective retaliatory mechanism, supported by several links and interdependencies between the undertakings, prevents the undertakings to deviate from consciously parallel behaviour. Third, as regards the fuel barometric pricing at petrol stations. According to FCO observation over the collected pricing information, the oligopolistic fuel market structure in Germany favoures the establishment of quasi-uniform pricing practices, such as increasing prices at the beginning of holiday periods and during the weekend. In this uniform increased pricing practices, the market leader inititated the prices and then followed by other fuel undertakings a few hours later. However, the FCO would not investigate these quasi-uniform pricing practices, because pricing scrutiny on the upstream and downstream fuel and gasoline markets will be legally and practically difficult. Hence, through this recent landmark case-law, the Bundesgerichtshof consentrates onthe following reference norms: Sec. 19 para.2 and para.3, Sec.37 para 1 German Act against Restraint of Competition (GWB). From this adjudication, the Bundesgerichtshof generated three main judicial issues, which are: First, with regard to legal question whether acquisition of several separate assets of undertakings could be deemed as a single corporate fusion in the light of Sec.37 para.1(1) of the GWB, thus the Court determines firstly whether the asset acquisition was an unitary event or process which is able to influence the market structures. Second, as regards to the indications of market structures in an oligopolistic market, which initially seem to be an existence of the parallel behaviour of undertakings in the market and thus to a market dominance could be rebutted or invalidated, provided there were effective competitions between undertakings on the market. Accordingly, the assessment of market interactions of undertakings requires comprehensive considerations of structural requirements on the market, which are of importance for economic considerations. Third, whenever the observed market conducts of undertakings in an oligopoly market was ambiguous, but to manifest a uniform behaviour which aims to reduce or eliminate competitions in the market, thus these market behaviours were subject to the application of Sec.19 para 3(2) of the GWB. Chapter Four Conceptual and Judicial Praxis 258 In this landmark case-law the Bundesgerichthof examined the Decision of the Bundeskartellamt of 29th April 2008 to prohibit over the previously informed merger and acquisition plan of Total Deutschland GmbH, namely, to acquire 59 petrol filling stations of OMV in Sachsen and Thüringen particularly pursuant to Sec.36 para.1 GWB. The key legal issues in this case were: collective market dominance, substantiation of the prices cartel through a quantitative analysis of prices and the forbidden suppression prices in the petrol filling station in Germany.864 Case facts: Total Deutschland GmbH (“Total”), a subsidiary of the France holding company Total S.A. Paris, operates in the domestic market of Germany and has already operated more than 1,000 petrol filling stations, which majority is located in Thüringen and Sachsen and has positioned as the fourth biggest operator of petrol filling stations in Germany. Whereas, OMV, a subsidiary of the holding company OMV AG Wien, operates in the mineral oil sector and ownes petrol filling stations in South and East Germany. In addition, OMV operates the Refinery factory in Bayern. On 5th December 2008 Total informed the Bundeskartellamt about the plan to acquire about 59 petrol filling stations in Sachsen and Thüringen. However, the Bundeskartellamt, through the Decision Number B 8–175/08, dated on the 29th April 2009 prohibited the informed merger or fusion plan based on the legal of Section 36 para.1 GWB. Moreover, the Bundeskartellamt was of the opinion that previously market dominating oligopoly hasexisted, namely collectively handled by Total and other four gasoline companies (Shell, Aral/BP, ConocoPhillips, Exxon Mobil (Esso)). Thus, the concerned fusion plan could largely coagulate and aggravate the existing market dominating oligopoly. Subsequently, based on the legal complaint, Oberlandesgericht (OLG) Düsseldorf through the Decision 04.08.2010–VI-2 Kart 6/09 nullified the Bundeskartellamt’s Decision, in particular: First, OLG Düsseldorf confirmed that there was a market separation between diesel petrol and automotive gasoline based on the accessibility test; Second, OLG Düsseldorf refused the Bundeskartellamt’s argument about the existence of collective market dominance 864 S. Gleave, ‚Benzinpreis – Marktmacht, Preissetzung und Konsequenzen‘ (Bundeskartellamt Sitzung des Arbeitskreises Kartellrecht Benzinpreis – Marktmacht, Preissetzung und Konsequenzen 6th Oktober 2019 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 259 after considering two factors, namely the vertical integration and the Germany-wide network of the gasoline filling stations. Table 1. Price Fixing in the Petrol Filling Station in Daily Operation (2007–2010) Chapter Four Conceptual and Judicial Praxis 260 Graphic 1. Example of the Price Increase Round Practice In the previous inquires over the gasoline and petrol filling station in Germany, the Bundeskartellamt had founded several salient market characteristics: (1) the homogenous product; (2) high market transparency; (3) a frequent direct and indirect communication between the companies; (4) relatively high interdependency; (5) the high entry barriers to the market; (6) no demand power. Furthermore, the Bundeskartellamt had also founded the price fixing practices in the petrol filling station sector, namely through the price increases and price decrease rounds. Firstly, the gasoline price increase was followed by petrol filling stations in the whole national market. Additionally, this price increase was initiated by Aral and operated wholly through the central pricing department. Secondly, in contract, the gasoline price decrease was only the reaction of petrol filling stations operated in the regional market, instead of the national market. Furthermore, these price increase and price decrease rounds had common ratio about three times higher or lower than the normal prices. More importantly the price increase and price decrease rounds were arranged through the following mechanism: First, the gasoline companies increased the prices in the whole domestic market; second, the petrol filling stations 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 261 increased the prices periodically between Monday until Thursday at 18 o’clock and others began the price increases at 11 o’clock. The initiators for these price increases were either BP (Aral) or Shell. About 3 hours later, almost the other petrol filling companies increased the prices, and thus followed by Total within the next 3,5 hours. ConocoPhillips also increased the price after 5 interval hours. These increases and decreases of prices mechanisms were to be depicted as follows:865 Based on the prices data, the Bundeskartellamt was able to expose the price parallelism, which led to the prices cartel in the petrol filling station industry, based on the following Edgeworth-cycle method: Graphic 2. Graphical Model of the Prices Trends in the Petrol Filling Station of 3 Operators In addition, the Bundeskartellamt also perfomed the sectoral inquiries (Sektoruntersuchung Kraftstoffe Abschlussbericht 2011), whereby the Bundeskartellamt concluded that the existing five petrol filling station companies, namely: (1) Shell, (2) Aral/BP, (3) ConocoPhillips (Jet), (4) ExxonMobil (Esso), and Total implemented oligopoly in this lucrative sector, based on the following evidentiary factors: First, the restricted access to the gasoline refinery supply. Second, market transparency 865 Bundeskartellamt, Sektoruntersuchung Kraftstoffe (B8–200/09) Abschlussbericht Mai 2011. Chapter Four Conceptual and Judicial Praxis 262 particularly the price. Third, the product’s homogeneity. Fourth, sanction mechanism for collective compliance. Accordingly, in this case the Bundeskartellamt firstly observed the periodical price parallelism which might indicate the absence of internal competition. Subsequently, the Bundeskartellamt examined the following indirect evidences of cartel, notably the routine direct and indirect communications between the companies which led to the market transparency. Additionally, the existence of any sanction instruments for ensuring compliances to the cartel practice was evaluated by the Bundeskartellamt as the other indirect evidence. Together with the observations over the market structures of the petrol filling station sector, the Bundeskartellamt concluded that the Total business plan to fusion or merger was to cause cartel infringement. Decision: The Bundesgerichtshof refused the Decision of OLG Düsseldorf and thus confirmed the Bundeskartellamt’s arguments. Accordingly, the Bundesgerichtshof holds a final decision that the fluctuations of gasoline prices was not an indirect evidence and could not lead to conclusion about the existence of an internal competition in the petrol filling station companies. The Bundesgerichtshof was of the opinion that following evidentiary factors shall be considered to substantiate the existence of cartel practices, which were: the market structures, particularly the high concentration index, the existing vertical integration through the fusion of factory and refinery of the gasoline companies, the high market transparency notably the price, and lastly the product homogeneity in the petrol filling station sector comprehensively. In the Indonesia Competition Law Since the inception of the Indonesia Competition Law No.5/1999, several prominent cases related to infringement against cartel prohibition have been brought before the KPPU, subsequently before the District Court (PN) and finally before the Indonesian Supreme Court (MARI). Nonetheless, starting from the recent MARI Decision, up to now, the judicial practices on application of circumstantial (indirect) evidence have shown an inconsistency and leave some difficulties, among others 4.2.2 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 263 how to harmonise the evidentiary rules of Article 42 of the Indonesia Competition Law No.5/1999 and evidentiary provisions of the Indonesia Criminal Procedural Law (KUHAP).866 Accordingly, this section will expose the Decisions aforementioned, from the most recent Decisions up to the onset Decisions. Cartels on Automotive Tire [The Indonesian Supreme Court-MARI Decision Number 221 K/Pdt.Sus-KPPU/2016]867 Case summary On 4th May 2018, the Indonesian Supervisory Commission for Business Competition (KPPU) obtained the formal notification (Relaas) of Decision from the Indonesian Supreme Court (Mahkamah Agung Republik Indonesia-MARI), Number Nomor 167-PK/Pdt.Sus-KPPU/ 2017 dated 25 January 2018, concerning the Supreme Appeal for Review (Peninjauan Kembali-PK) over the Decision of KPPU on automotive tire cartels. This Peninjauan Kembali or PK was lodged by the alleged companies, PT Bridgestone Tire Indonesia dan PT Sumi Rubber Indonesia, against KPPU in order to annul the previous KPPU’s Decision, which found that both companies have violated the Cartels prohibition under the Law Number 5/1999. The contents of the Decision of Peninjauan Kembali (PK), is: “1. Rejecting the appeal for review from PT Bridgestone Tire Indonesia dan PT Sumi Rubber Indonesia, as the 1st appeallant and 2nd appeallant; 2. Punishing the 1st and 2nd appeallants, also as the appeallants for Cessation (Kasasi) and the appeallants for Objection, before the Indonesian Supreme Court (MARI) and the Higher Court (Pengadilan Tinggi).”868 Therefore, by virtue of this Supreme Appeal for Review (PK), the Decision of KPPU, stating that the alleged companies, PT Bridgestone Tire 4.2.2.1 866 Lubis and Sirait, Hukum Persaingan Usaha (n 225) 324–329. See also Rizkiyana and Iswanto, ‘Eradicating Cartel’ (n 28) 5–10. 867 Decision Number 221 K/Pdt.Sus-KPPU/2016, PT. Bridgestone Tire Indonesia, dkk v. Komisi Pengawas Persaingan Usaha (KPPU) (The Indonesian Supreme Court -MARI) ‹https://putusan.mahkamahagung.go.id/putusan/ab9d7a55d988324692cf 5f22c8d35b01› accessed on 2nd January 2019. 868 KPPU, http://www.kppu.go.id/id/blog/2018/05/putusan-kartel-ban-inkracht/, accessed on 31st December 2018. Chapter Four Conceptual and Judicial Praxis 264 Indonesia dan PT Sumi Rubber Indonesia have committed cartels in the automotive tire industry, has become a final and binding decision (inkracht van gewijsde). Prior to the issuance of the Indonesian Supreme Court Decision (MARI), KPPU has decided, after concluding the antitrust enforcement proceedings, that 6 automotive tire producers, namely PT Bridgestone Tire Indonesia, PT Sumi Rubber Indonesia, PT Gajah Tunggal, Tbk., PT Goodyear Indonesia, Tbk., PT Elang Perdana Tire Industry, and PT Deli Rubber Industry have legally and convincingly violated the Cartel Prohibitions in the Article 5 and Article 11 of Law Number 5 Year 1999 concerning Prohibition of Monopolistic Practices and Unfair Business Competition (the Law Number 5/1999). KPPU has also imposed pecuniary fines on each reported party (the six companies) in the amount of 25 Million Rupiah which must be paid to the Indonesian State treasury Office.869 The Decision Equally important, in this case proceedings, KPPU has applied the indirect (circumstantial) evidences in order to determine that the alleged companies, PT Bridgestone Tire Indonesia and the other 5 car tire companies, have violated the Cartel prohibitions stipulated by Article 5 and Article 11 of the Law Number 5/1999. The Higher Court, and finally the Indonesian Supreme Court have thus confirmed the KPPU’s Decision in the Decision Number 221K/PDT.SUS-KPPU/2016, that accepts the indirect (circumstantial) evidence. Nonetheless, in the legal considerations the Indonesian Supreme Court does not stipulate the legal basis on the receipt of indirect evidence as evidence in Law Number 5 of 1999. Besides, the consideration of the Indonesian Supreme Court does not contain the principle of evidentiary process which requires at least two valid evidences to prove the violation of Law Number 5 of 1999 pursuant to Article 42 thereof.870 869 ibid. 870 Silalahi and I C Edgina, ‘Pembuktian Perkara Kartel Di Indonesia Dengan Menggunakan Bukti Tidak Langsung (Indirect Evidence) Kajian Putusan KPPU Nomor 17/KPPU-I/2010 dan Nomor 08/KPPU-I/2014 serta Putusan Nomor 294 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 265 In this respect, the Indonesian Supreme Court, confirming the previous KPPU’s Decision, corroborated and thus accepted the indirect (circumstantial) evidences to prove cartels in the automotive tire sector. Specifically, KPPU applied the Economic evidences by means of the ‘Harrington method of a cartel detection’ The Harrington method refers to the analytical method between errors and recidual regressions between firms on a market, which is based on the estimation of panel data, in order to detect cartels on the market. Furthermore, KPPU used this Harrington method to discover, whether the prices of automotive tires stipulated independently and was not influenced unlawfully by other competing firms through an examination of contemporaneous correlation of prices.871 Furthermore, the Indonesian Supreme Court also confirmed the KPPU’s Decision, that applied the communication evidences, in the form of: First, the minutes of meetings of APBI (Indonesian Automotive Tires Producents Association), which stated that the members of APBI are strongly banned from reducing the prices up to the bottom. Secondly, the verbatims of meetings of Presidium (chairing committee) of APBI, which stated: "All APBI members are asked to be able to hold back and continue to control their distribution according to the development of their (car-tire) demands." Finally, in this Decision, the Assembly of Judge accepted the application of indirect (circumstantial) evidences by stipulating that in the re- K/PDT.SUS/2012 dan Nomor 221 K/PDT.SUS-KPPU/2016’ (Jurnal Yudisial Vol. 10 No. 3 Desember 2017) 311–330. 871 In the Indonesian Supreme Court Decision Number Nomor 221 K/Pdt.Sus-KP- PU/2016, stipulated as follows: Joseph Harrington by himself asserted in this scientific paper results that the application of the Harrington method of a cartel detection could not become the conclusive evidence of the cartel occurrence. Accodingly, the respective Harrington method means: “high price-cost margins are not an adequate screening device”; “econometric evidence of structural change is far from conclusive evidence of collusion.” “A high price-cost margin (properly measured) is evidence of market power and does not imply collusion. Other reasons for a high pricecost margin are greatly differentiated products, production technologies, protected by patents and trade secrets and high search cost for consumers.” paras. 13.1.–13.10. Chapter Four Conceptual and Judicial Praxis 266 al practices of business activities, agreements regarding prices, production, region (cartel) and agreements of anti-competitive practices were often done through the secretive (tacit) ways, so that the business competitions, the evidences which are not direct (indirect / circumstantial evidence), shall be accepted as the valid evidence insofar as the proofs are sufficient and constitue logical evidence, and there is no other stronger evidence, which could can weaken the indirect (circumstantial).872 Amlodipine Anti-Hypertension Pharmaceutical Cartel [Case NO. 17/KPPU-I/2010] In this land-mark case law, KPPU had to intensively investigate in order to substantiate the infringements against the Law No.5/1999, as follows: Article 5: price fixing prohibition, Article 11: conspiracy prohibition, Article 16: prohibition over international agreement causing monopoly and Article 25 (a): prohibition of abuse of dominant position of the Law No. 5/1999. Moreover, during the proceedings KPPU intensively employed the circumstantial evidences to substantiate the existence of cartel agreements in the anti-hypertension medical products in Indonesia. Case Facts: As of 2009 KPPU conducted investigation over the 6 pharmaceutical companies, which were: (I) PT. Pfizer Indonesia, (II) PT Dexa Medica, (III) Pfizer Inc., (IV) Pfizer Overseas LL.C, (V) Pfizer Global Trading, (VI) Pfizer Corporation Panama, notably over the cartel practices within the years 2004–2009. Furthermore, PT Pfizer Indonesia is a foreign investment company, whose majority of shares is owned by Pfizer International as the holding company. While PT Dexa Medica is a domestic investment company, whose majority of shares is owned by domestic investors. Both of these principal companies collectively engaged in the production and marketing of special anti-hypertension pharmaceutical product with a special component, Amlodipine Therapy in Indonesia. Moreover, between PT Pfizer Indonesia and PT Dexa Medica and the other companies there were special distribution relationships, as follows: 4.2.2.2 872 Silalahi and Edgina, „Pembuktian Perkara Kartel Di Indonesia Dengan Menggunakan Bukti Tidak Langsung (Indirect Evidence) (n 869) 326–328. 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 267 Graphic 1. Distribution Relationships of Amlodipine Therapy of the Six Companies (2004–2010) in Indonesia Notes: 1. Pfizer Inc. was the patent holder of Amlodipine Besylate and a parent company of Pfizer Overseas LLC in the supply agreement. Pfizer Inc. also was the parent company of Pfizer Corporation Panama, which was shareholder of 43% of PT Pfizer Indonesia; 2. Between Pfizer Overseas LLC and PT Dexa Medica, the Supply Agreement had been concluded; 3. In the operational, Pfizer Global Trading acted as the supplier of Amlodipine Besylate to PT Pfizer Indonesia and PT Dexa Medica; 4. In practice, PT Pfizer Global Trading instead of Pfizer Overseas LLC, which supplied the Amlodipine Besylate to PT Dexa Medica and PT Pfizer Indonesia. At that time, PT Global Trading was an affiliation company of Pfizer Overseas LLC; 5. The Supply Agreement required that all business communications between PT Dexa Medica and Pfizer Overseas LLC, namely the copies, must be forwarded Chapter Four Conceptual and Judicial Praxis 268 and attached to PT Pfizer Indonesia, in particular regarding the request for supply of Amlodipine Besylate, as the raw material; 6. In March 2007, PT Pfizer Indonesia and Pfizer Inc. concluded a license agreement over the patent right of Amlodipine Besylate, whereby this agreement was effective as the agreement of January 2007 7. Pfizer Inc. was the principal shareholder of PT Pfizer Indonesia through its proxy companies Pfizer Corporation Panama and Warner Lambert; 8. PT Anugrah Argon Medica is the main distributor company for the pharmaceutical products with Amlodipine Besylate for anti-hypertension, which were produced both by PT Pfizer Indonesia, with trademark Norvask and by PT Dexa Medica with trademark Tensivask In the geographical market of anti-hypertension products in Indonesia, there were two main trademarks: the Norvarsk, produced and marketed by PT Pfizer Indonesia and the Tensivask, produced and marketed by PT Dexa Medica. Moreover, PT Anugrah Argon Medica (“AAM”) as the main distribution company reported regularly following business information to its suppliers: (1) the forecasting of the market demands of the Amlodipine therapy, (2) the sales report of the Amlodipine therapy, (3) the expired products, (4) the flows of the Amlodipine therapy in the domestic market. Subsequently, KPPU inquired the parallel price trends of the Norvarsk and the Tensivask in the domestic market between the years 2004–2009, as follows: Graphic 2. Prices Trends of the Norvarsk per Unit (2004–2009) in Indonesia 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 269 Graphic 3. Prices Trend of the Tensivask per Unit (2004–2009) in Indonesia However, according to market survey conducted by the World Health Organisation (WHO) over the international prices of pharmaceutical anti-hypertension products with the Amlodipine Besylate, KPPU founded that the domestic prices of the Norvarsk was 51,13 % more expensive and of the Tensivask was 49,43 % more expensive than the international benchmark prices of similar products. Based on the statistical information concerning the market shares, KPPU conducted furthermore analysis by employing the HHI (Hefindahl-Hirschmann Index) and CR4 (the market shares of the four biggest companies) and founded the anti-hypertension pharmaceutical market in Indonesia was highly concentrated. Furthermore, KPPU also analysed several structural aspects, namely: products homogeneity, multimarket contacts, the high entry barriers such as technology and investment capital in the pharmaceutical product of anti-hypertension with amlodipine therapy in Indonesia. In the subsequent analysis, KPPU analysed comprehensively the behavioural aspect of the pharmaceutical companies, particularly over the periodical information exchanges and thus leading to the market transparency of the anti-hypertension amlodipine therapy in Indonesia. Decision: In the first phase of analysis KPPU decided that there were several routine information exchanges from PT Dexa Medica and PT Pfizer Indonesia through Pfizer Global Trading as the principal supplier for the anti-hypertension medical product, notably Amlodipine Besylate leading to the relevant market transparency. In addition, Chapter Four Conceptual and Judicial Praxis 270 this information exchanges were also facilitated by the sibling relationships between the director and the commissioner of PT Pfizer Indonesia and PT Dexa Medica, which provided a multi-market contact between PT Pfizer Indonesia and PT Dexa Medica. KPPU concluded that the main purpose of these information exchanges was to establish production cartel and the price cartel. In the second phase, KPPU analysed furthermore the price parallelism of the Norvask and the Tensivask between 2004 and 2009, the production volume parallelism of the Norvask and the Tensivask by using the homogeneity of variance test. Accordingly, KPPU examined the market concentration index, HHI and CR4, of the Amlodipine Besylate market in Indonesia and found that the relevant market was highly concentrated and had an inelastic market, which means the product prices remained high although there was a cheap generic pharmaceutical products programme from the government. In addition, the parallel pricing of the Norvask and the Tensivask had following characteristics: First, the increase trend within a certain period. Second, the increase trend was linear in similar percentages, around 3–6 %. Supported by the very high entry barriers to the anti-hypertension therapy market due to the huge investment capital and very expensive technology, KPPU strongly concluded based on these supporting factors that there had been a price fixing and production cartel practices which are prohibited by Article 5 and Article 11 of Law No.5/1999. Therefore, KPPU ruled out that the six pharmaceutical companies, chiefly PT Pfizer Indonesia and PT Dexa Medica as the main producers of the Amlodipine therapy for anti-hypertension in Indonesia, had committedly infringed Article 5 concerning price fixing prohibition and Article 11 regarding cartel pursuant to Indonesian Competition Law No.5/1999. Cement Loco Cartel [Decision Number 01/KPPU-I/2010] In this landmark case KPPU had to substantiate that the alleged 8 cement companies and the association had already infringed prohibition according to Article 5 and Article 11 Law No.5/1999 particularly concerning the price maintenance and cartel practices within the domestic cement industry. Although the evidences of written agreements were minimal, through the employment of circumstantial evidences in par- 4.2.2.3 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 271 ticular the economic and market analyses over the cement industry in a certain period, KPPU was able to substantiate the existence of cartel agreement between the alleged cement companies for committing the cartel on cement prices. Case Facts: In 2004 KPPU initiatively began to conduct market monitoring and market investigation in the domestic cement industry in particular toward the existing eight cement companies in Indonesia, which were: (I) PT Indocement Tunggal Perkasa Tbk., (II) PT. Holcim Indonesia, Tbk, (III) PT. Semen Baturaja (Persero), (IV) PT. Semen Gresik (Persero) Tbk, (V) PT. Semen Andalas Indonesia, (VI) PT. Semen Tonasa, (VII) PT. Semen Padang, (VIII) PT. Semen Bosowa Maros. In the preliminary, KPPU monitored and inquired the market shares and total domestic consumptions of cement as well as the production capacities including the total sales volumes. Moreover, KPPU also noted that these eight companies periodically participated in a series of meetings under the auspices of the National Cement Association (ASI) among others to discuss and to monitor the prices and total production volumes of cement around 33 provinces. The National Cement Association (ASI), as the main association for cement producers in Indonesia, established since 1960 in Jakarta, defined its function as follows: First, a forum for communication, consultation and coordination between the cement producers; second, a sole intermediary body for bridging the domestic cement producers with the government and other external parties. In ASI, there is the presidium, a highest organ whose tasks are the following: First, ASI is not the partner of the government, instead ASI has the function to lobby the government to follow the ASI’s proposal; second, ASI is to check the illegality of information exchanges according to prevailing regulation; third, ASI is to check the illegality of the price maintenance against the price fluctuations according to government regulation; fourth, ASI lobbied the government, namely Directorate General of Agro and Chemistry Ministry of Trade and Industry, to impose import tax against the incoming cement (10 %) and clinker (15%). Furthermore, ASI conducted regular meetings to discuss following issues: (1) evaluation of distributions in every zoning area, (2) confirmation of realisation for cement supply per zoning area and per factory, (3) evaluation of cement procurements in every zoning area, (5) prognosis of do- Chapter Four Conceptual and Judicial Praxis 272 mestic cement procurements. The Ministry of Industry and Trade also legalised the information exchanges meetings through the Letter Nr. 222/AK65/2010 for obtaining periodic and whole reports on the domestic cement market developments. The Ministry claimed that this practice was mandated by Law No.5/1984 on Industry. Based on these preliminary circumstances, KPPU initiated further analysis and investigations by using the direct evidences, namely the existing blueprint of cartel process, and the indirect evidences. As to the indirect evidences, KPPU emphasised the analysis upon the structural and behavioural aspects of the cement market. The main indication of behavioural aspects is the cement prices in the domestic market, whereby KPPU evaluated the cement prices with a non-transitory trend in a certain period, notably the parallel prices and facilitating prices in the domestic market. The following tables show the prices parallelism of the cement product “Loco” in several zoning areas. In this price parallelism analysis, KPPU employed the cost of goods sold/ COGS, Pearson correlation test, and homogeneity of variances test. Graphic 1. Market Prices Trends of “Loco” cement by 8 (I-VIII) Cement Producers (2004–2009) The Cement prices fluctuations in the Zoning Area: D.I Aceh The Cement prices fluctuations in the Zoning Area: North Sumatra 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 273 The Cement prices fluctuations in the Zoning Area: West Sumatra The Cement prices fluctuations in the Zoning Area: South Sumatra The Cement prices fluctuations in the Zoning Area: Lampung The Cement prices fluctuations in the Zoning Area: DKI Jakarta Chapter Four Conceptual and Judicial Praxis 274 The Cement prices fluctuations in the Zoning Area: West Java The Cement prices fluctuations in the Zoning Area: Banten The Cement prices fluctuations in the Zoning Area: Central Java The Cement prices fluctuations in the Zoning Area: East Java 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 275 The Cement prices fluctuations in the Zoning Area: South Sulawesi The Cement prices fluctuations in the Zoning Area: East Kalimantan Furthermore, KPPU analysed the financial statements of each cement company between 2004 and 2009, notably the parallel increase of total profits of the cement companies, as follows: Graphic 2. Trends of Total Profits of the 8 (I-VIII) Cement Producers (2004–2009) In the further analysis, KPPU examined the structural aspect of the domestic cement market notably the composition of market shares and the increases of market share of each cement company. Chapter Four Conceptual and Judicial Praxis 276 G ra ph ic 3 . M ar ke t S ha re an d In cr ea se s o f M ar ke t S ha re s o f 8 C em en t C om pa ni es (2 00 4– 20 09 ) Ac tu al M ar ke t S ha re s o f t he C em en t C om pa ni es (2 00 4– 20 09 ) In cr ea se s o f t he M ar ke t S ha re s o f t he C em en t C om pa ni es (2 00 4– 20 09 ) 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 277 Furthermore, KPPU also found that PT. Indocement Tunggal Perkasa Tbk and PT. Semen Gresik (Persero) Tbk made special agreements with the local distributor: Graphic 4. Distribution Lines of PT Indocement Tunggal Perkasa Tbk (Cement Company I) Decision: Embarking from the above mentioned legal and economic analysis of the domestic cement market and cement companies particularly according to Article 1 No.7 Law No.5/1999, the judicial committee ruled out following decisions: First, the eight cement companies (I- VIII) had not been proven to infringe cartel price prohibition pursuant to Article 5 Law No.1999. Second, the eight cement companies (I–VIII) had not been proven to infringe conspiracy prohibition pursuant to Article 11 Law No.5/1999. Furthermore, KPPU also recommended the government to dissolve the national cement association (ASI) due to its susceptibility for facilitating cartel practices as well as to stipulate the maximum retail prices for the domestic cement products. Flight Airline Fuel Surcharges [Decision Number 25/KPPU-I/2009] In this landmark decision, KPPU intensively examined the investigatory results over alleged infringement against Article 5 of the Law Number. 5/1999 concerning cartel prices committed by 13 domestic flight 4.2.2.4 Chapter Four Conceptual and Judicial Praxis 278 companies. For certain periods there had been cartel practice on the fuel surcharge prices between these companies, which were results of explicit agreement through the decision of the association (INACA) as well as the tacit agreements through series of internal meetings for prices coordination. Furthermore, these periodical meetings had been conducted under auspices of INACA, as the only authorised association of domestic flight companies in Indonesia. The agenda in those internal meetings inter alia: to adjust the prices of fuel surcharges. Fuel surcharge is an additional price, which is the result of the margin difference between the planned price and the actual price for purchasing avtur-oil for the airplanes. Between the years of 2004 and 2008, KPPU had monitored market trends of these flight companies particularly the market shares in the domestic flight market: Graphic 1. Market Shares of the 12 Indonesian Flight Domestic Companies Flight Companies 2004 2005 2006 2007 2008 2009 Garuda Indonesia (Persero) 34.00% 29.26% 24.15% 22.63% 20.68% 19.16% Sriwijaya Air 3.73% 9.82% 10.90% 10.98% 12.76% 12.76% Merpati Nusantara Airlines (Persero) 13.56% 7.72% 5.91% 8.15% 6.68% 6.24% Mandala Airlines 11.81% 9.94% 5.83% 5.32% 9.31% 6.83% Riau Airlines 0.00% 0.00% 0.34% 0.56% 0.63% 0.73% TEAS 1.43% 1.36% 0.70% 0.79% 0.72% 0.58% Lion Mentari Airlines 26.61% 22.81% 23.05% 20.07% 22.53% 22.53% Wings Abadi Airlines 0.64% 7.47% 7.02% 7.22% 6.28% 7.71% Metro Batavia Airlines 8.16% 8.27% 13.79% 16.32% 12.88% 15.50% Kartika Airlines 0.00% 0.41% 0.91% 0.27% 0.65% 0.56% Trigana Air Service 0.00% 0.00% 2.18% 2.26% 1.90% 1.83% 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 279 Indonesia Air Asia 0.06% 2.94% 5.23% 5.43% 5.55% 5.55% Total 100% 100% 100% 100% 100% 100% Furthermore, in 2005 the Ministry of Transportation issued a Ministerial Decree (“KepMenhub”) allowing the domestic flight companies to stipulate the amount of fuel surcharge prices based on the market prices of avtur-oil. Accordingly, based on the compromise of the domestic flight companies, the INACA decided to set the price of fuel surcharges in amount of 20.000 rupiahs (IDR) for each passenger. However, in May 2006 KPPU issued an instruction for INACA to annul this decision and recommended that each domestic flight undertaking to decide price of fuel surcharges price individually. These instructions and recommendations were followed. In 2008, the Ministry of Transportation issued a further regulation, Decree Nr. AU/4603/ DAU.1056/08, regarding the stipulation of prices for fuel surcharges, aimed to the existing domestic flight companies. In this regulation, the so-called Zoning method shall be used to formulate the prices for fuel surcharges, whereby the Zones around Indonesia are to be divided into 5 zones: a) Zone 1 (flight duration < 1hour), b) Zone 2 (flight duration < 2hour), c) Zone 3 (flight duration < 3hour), d) Zone 4 (flight duration 3–4 1hour), e) Zone 5 (flight duration > 4 hour). Accordingly, based on this regulation each of the domestic flight undertaking stipulate different formulas for airlines prices: Graphic 2. Prices Calculation Formulas of the 12 Indonesian Domestic Airlines No. Domestic Airlines Companies Prices Calculation Formula 1. Garuda Indonesia (Persero) Basic fare + PPN + IWJR (Rp 6,000,-) + FS 2. Sriwijaya Air Basic fare + PPN + IWJR (Rp 10,000,-) + FS 3. Merpati Nusantara Airlines (Persero) Basic fare + PPN + IWJR (Rp 6,000,-) + Administration Fee (Rp5,000,-) FS 4. Mandala Airlines Basic fare + PPN + IWJR (Rp 6,000,-) + FS + Biaya administrasi (Rp 4,000,-) 5. Riau Airlines Basic Fare + PPN + IWJR (Rp 6,000,-) 6. TEAS Basic fare + PPN + IWJR (Rp 6,000,-) + FS 7. Lion Mentari Airlines Basic fare + PPN + IWJR (Rp 6,000,-) + Insurance + FS Chapter Four Conceptual and Judicial Praxis 280 8. Wings Abadi Airlines Basic fare + PPN + IWJR (Rp 6,000,-) + Insurance + FS 9. Metro Batavia Airlines Basic fare + PPN + IWJR (Rp 5,000,-) + FS 10. Kartika Airlines Basic fare + PPN + IWJR (Rp 6,000,-) + FS 11. Trigana Air Service Basic fare + PPN + IWJR (Rp 11,000,-) + FS 12. Indonesia Air Asia Basic fare + PPN + IWJR (Rp 6,000,-) + FS (10th May 2006–11th November 2008) Basic Fare + PPN + IWJR (Rp 6,000,-) + Convenience Fee (latest) Notes: a. PPN: Value Added Tax b. IWJR: Obligatory Life Insurance c. FS: Fuel Surcharge d. Rp.: Rupiah currency (IDR) Moreover, KPPU also noticed that between the years of 2004 and2009 there were significant price fluctuations of avtur-oil in Indonesia: Graphic 3. Price Fluctuations of Avtur oil in Indonesia Note: Vertical axis: Prices in Rupiahs Horizontal axis: Observed Months Although there had been significant differences in the formulas and the consumption levels, the prices of fuel surcharges between several airline companies remained similar. These price parallelisms, for instance can be showed as follows: 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 281 Gr ap hi c 4 . P ri ce P ar al lel ism s o f t he F ue l S ur ch ar ge s ( FS ) o f t he In do ne sia n 12 D om es tic A irl in es D om es tic A ir lin es C om pa ni es FS P ri ce F lu ct ua tio n (0 –1 h ou r) FS P ri ce F lu ct ua tio n (1 –2 ho ur ) FS P ri ce F lu ct ua tio n (2 –3 h ou rs ) G ar ud a I nd on es ia (P er se ro ) Sr iw ija ya A ir M er pa ti N us an ta ra A irl in es (P er se ro ) Chapter Four Conceptual and Judicial Praxis 282 Li on M en ta ri A irl in es W in gs A ba di A irl in es M et ro B at av ia A irl in es In do ne sia A ir A sia 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 283 Subsequently, KPPU with the economic assistance from the statistical expert examined the causality between these prices for fuel surcharges to determine the existence of cartel prices practice after the annulment of association (INACA) decision for common fuel surcharge price. The method used was the correlation test and the homogeneity of variance test with the results as follows: Graphic 5. Results of the Homogeneity Test of the FS Prices amongst the 12 Domestic Airlines FS Price Fluctuation (0–1 hours) Correlation Value (r) ≥ 0,90 FS Price Fluctuation (1–2 hours) Correlation Value (r) ≥ 0,90 FS Price Fluctuation (2–3 hours) Correlation Value (r) ≥ 0,90 Chapter Four Conceptual and Judicial Praxis 284 In the following phases, KPPU also noticed that several internal meetings between these domestic airline companies occurred, as follows: Graphic 6. Series of Internal Meetings between Domestic Airlines Companies, Association and the Ministry of Transportation Nr. Date Venue Agenda 1. 04th Mai 2006 Meeting room Pelita Airlines, Abdul Muis Jakarta Pusat Discussing the Fuel surcharge due to increase of oil price 2. 30th Mai 2006 Meeting room Lion Air, Gajah Mada, Jakarta Pusat Response to Press Release of KPPU on the prohibition of collective fuel surcharge prices 3. 19th September 2007 Meeting room of Gedung Cipta 3rd Fl. Discussing the proposal for increasing FS due to Idul Fitri (Moslem religious big event) 4. 11th December 2007 Meeting room of INACA Arrangement of Ceiling Prices (Max. Prices) of FS 5. 15th January 2008 Meeting room of INACA Ceiling prices of FS 6. 07th Mai 2008 Meeting room of INACA Discussing Justification of Elimination of PPN to FS 7. 15th September 2008 Meeting room of Garuda Indonesia Discussing Ministerial Decree on FS 8. 05th August 2009 Meeting room of Mandala Airlines Responding to Press Release of KPPU concerning Infringement Allegation 9. 03th November 2009 Meeting room, Merpati Nusantara Airlines Revision of Ministerial Decree on FS 10. 17th November 2009 Meeting room, Merpati Nusantara Airlines Revision of Ministerial Decree on FS Decision: Embarking from those circumstantial facts and the existing legal evidences, KPPU decided as follows: First, although the written agreement through the decision of INACA to set cartel prices for fuel surcharges had been annulled, in fact there were significant prices parallelisms between May 2006 until March 2008. In addition, each of the alleged domestic airline company applied different formula for calculating the prices and the consumption volumes of avtur-oil. Based on 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 285 the comprehensive analysis of circumstantial evidences using the economic statistical tests, the direct and indirect meetings between the companies and the association and the absence of reasonable economic justification from the companies for fuel surcharges prices stipulation, thus KPPU decided there had been tacit agreement between the domestic airline companies to commit cartel prices which is strictly prohibited by Article 5 Law No.5/1999. Second, KPPU decided that 4 airlines were not reasonably substantiated for infringing Article 5 Law No.5/1999 and thus acquitted. Short Message Service (SMS) Telecommunication [Decision Number 26/KPPU-I/2007] Case summary: Initially, after the implementation of Law No.5/1999, KPPU was faced by the challenge to substantiate the existence of prices cartel in the SMS cellular-tariff which is strictly prohibited by Article 5 Law No.5/1999. This prices cartel agreed between incumbent and new entrant companies engaging in the telecommunication sector in Indonesia. This prices cartel had been for several years realised through a several complex explicit and tacit agreement between 9 cellular operators. Case Facts: Between the years 2004 and 2008 nine cellular operators, namely (1) Excelcomindo; (2) Telkomsel; (3) Indosat; (4) Telkom; (5) Hutschinson; (6) Bakrie Telecom; (7) Mobile-8; (8) Smart Telecom and (9) Natrindo Sel made several arrangements to set cartel prices particularly for the Short Message Services (SMS) for cellular-phone users. These cartel prices took place after the Government of Indonesia (GoI) issued the policies for elimination of telecommunication monopoly as well as the share cross-ownership requirements of telecommunication companies, as stipulated in the Law No.3 year of 1989 and the Telecommunication Minister Decision Nr. 72/1999. Consequently, there were only three principal telecommunication companies, namely: Telkomsel, Excelcomindo, and Indosat. Subsequently, there were other six new undertakins entering the telecommunication market. These nine telecommunication companies provided several telecommunication services, for instance: fixed line telephone, cellular phone, and fixed wireless access, and Multimedia Messaging Services 4.2.2.5 Chapter Four Conceptual and Judicial Praxis 286 (MMS). However, all of these telecommunication companies offered one common service, namely SMS service. The SMS service market has several unique characteristics in terms of functionality, prices and characteristic. First, SMS service meanstext messages without voice and picture sent through a signaling canal. Second, the tariff for SMS service calculated based on the sums of sent messages and not levied on the SMS receiver. Additionally, the average tariffs of SMS service are lower than other telecommunication services. Third, the SMS service is for a unilateral communication and the volume of sent data is limited. In this case the SMS services were provided by all cellular operators within 33 provinces of Indonesia. Between the years of 2004 and2007 the basis tariffs of SMS services of the nine operators are as follows: Table 2. Basis Tariff of SMS services SMS Operator Product Destination 2004 2005 2006 2007 Telkomsel Hallo Off-net 250 250 250 250/350 Hallo On-net 250 250 250 250/350 Simpati Off-net 350 350 350 350 Simpati On-net 350 350 299 299 Kartu AS Off-net 300 300 300 299 Kartu AS On-net 300 150 150 149 Indosat Matrix Off-net 300 300 300 300 Matrix On-net 300 300 300 300 IM 3 Off-net 350 350 350 350 IM 3 On-net N/A 150 150 150 Mentari Off-net 350 350 350 350 Mentari On-net 350 350 350 350 XL xPlor Off-net 250 250 250 250 xPlor On-net 250 250 250 250 Bebas Off-net 350 350 350 350 Bebas On-net 350 350 350 350 Jempol Off-net 299 299 299 299 Jempol On-net 99 99 99 99 4.2 Judicial Praxis concerning the Indirect (Circumstantial) Evidence 287 Telkom Flexi Classy Off-net N/A N/A N/A 250 Flexi Trendy On-net N/A N/A N/A 350 Mobile 8 Fren postpaid Off-net N/A N/A N/A 250 Fren prepaid Off-net N/A N/A N/A 300 Bakrie Esia prepaid Off-net N/A N/A N/A 250 Esia postpaid Off-net N/A N/A N/A 250 NTS NTS prepaid Off-net 350 350 350 350 Note: Off-net: SMS services between different operators On-net: SMS services between same operators At the outset, the prices parallelism of the SMS services was a result from the specific clause for prices maintenances of SMS services within the cooperation agreement of interconnection between the operators (“PKS Interkoneksi”). However, the Telecommunication Supervisory Body instructed the operators to revoke the agreement because it infringed the prohibition of Article 5 Law No.5/1999 pertaining cartel prices. Nevertheless, based on further inquiries of the KPPU as of 2004 until 2008, even without the existence of PKS Interkoneksi, the base tariffs of SMS services between the existing operators showed the prices parallelism. KPPU presumed that this prices parallelism could be either the main indication of the cartel practices or the result of market equilibriums. KPPU asserted further that, the share cross-ownership policy between the telecommunication companies in 1999 might largely cause the information exchanges chiefly amongst the principal operators: Telkomsel, Indosat and Excelcomindo. Accordingly, KPPU conducted further economic analysis of the SMS service tariffs using the methods called OVUM to determine whether there had been cartel prices even without the existence of written agreements. Decision: KPPU examined firstly the case by invoking Article 1 No.7 of Law No.5/1999 pertaining the existence of an explicit and tacit agreement. KPPU was of the opinion that the tacit agreement to establish cartel prices in SMS services could be fully confirmed had two re- Chapter Four Conceptual and Judicial Praxis 288 quirements fulfilled: First, the existence of prices parallelism for a certain period in the relevant market. Second, the information exchanges either directly or indirectly concerning the existing and future prices of SMS service between the operators. With regard to the prices parallelism, KPPU had concluded based on the legal and economic inquiries that the cartel prices had been existed before, during and after the PKS Interkoneksi agreement. The prices parallelism was not a result from the market equilibriums in the SMS service in Indonesia, but the result of the information exchanges between the principal operators as well as the secretive negotiations between the principal operators as the incumbent and the other six operators as the new entrants. Through these secretive negotiations the incumbent required the new entrants to abide with the recommended prices for SMS services for obtaining the cellular interconnections. Furthermore, the information exchanges activities between the incumbents were prompted by shares cross-ownership prescribed by the Law and the Ministerial Decision in 1999. Embarking from these juridical and economic enquiries in the relevant market of SMS service in Indonesia, KPPU finally could substantiate that 6 operators had infringed cartel prices prohibition according to Article 5 Law No.5/1999 both through the explicit “PKS Interkoneksi” agreement and secretive negotiations to maintain the cartel prices in the absence of written agreement. However, KPPU could not substantiate the other 3 operators for infringing cartel price prohibition pursuant to Article 5 Law No.5/1999 and thus acquitted these three operators. Chapter Interim Result Firstly, nowadays it has been generally accepted that cartels infringement is distinct from other types of competition law violations, namely due to its clandestine actors, secretive and lucrative practices. “The harder the investigations get, the smarter the suspects get” in cartel law enforcement efforts prompts competition law authority to employ special measures and impose a particular investigatory approach to detect cartels infringement. Thus, cartels frequently involve multiple cheatings. Further, cartels practice osften occurs in the oligopolistic market. 4.3 4.3 Chapter Interim Result 289 Accordingly, for the purpose of proving cartels infringement the competition law authorities have developed other types of evidences such as economic evidences to detect cartels practice. In a more advanced step, the Organisation for Economic Co-operation and Development (OECD) has introduced two categories of evidences in the detection and substantiation of cartels infringement nowadays, which are: Direct evidence and Indirect (circumstantial) evidences. The first type of evidence refers to “Direct evidence of an agreement is that which identifies a meeting or communication between the subjects and describes the substance of their agreement. The most common forms of direct evidence are 1) documents (in printed or electronic form) that identify an agreement and the parties to it, and 2) oral or written statements by co-operative cartel participants describing the operation of the cartel. Whereas, the second type of evidence refers to “evidence that does not specifically describe the terms of an agreement, or the parties to it. It includes evidence of communications among suspected cartel operators and economic evidence concerning the market and the conduct of those participating in it that suggests concerted action.” Nevertheless, the precedents of European Competition and German Cartel Laws have indicated that the indirect evidence (economic evidence) is not sufficient or adequate to substantiate cartels infringement, thus it requires the direct evidences as well, in the light of the high evidentiary standards, notably in the German Cartel Law. Secondly, with regard to the ‘plus-factors’ and proving cartels infringement, the precedents of the Antitrust law have established that according to Section 1 of the Sherman Act, the Courts would not judge mere parallelism of actions of undertakings on a relevant market as cartels and thus punish these parallel behaviours. Furthermore, the Courts prerequisite the existences of evidences which ‘tends to exclude the possibility that the alleged conspirators acted independently […]. In other words, plaintiffs must show that the inference of conspiracy is reasonable in light of competing inferences of independent action or collusive action that could not have harmed plaintiffs.’ Hence, the Courts in the Antitrust cases, require the existence of ‘plus-factors’ in addition to the parallel actions on the relevant market in order to satisfactorily prove conspiracy or cartels by the undertakings. Moreover, the existence of ‘plus-factors’ has following drawbacks, as follows: “two basic problems Chapter Four Conceptual and Judicial Praxis 290 have attended judicial efforts to identify and evaluate plus factors. Firstly, courts have failed to establish any analytical framework that explains why specific plus factors have stronger or weaker evidentiary value or to present a hierarchy of such factors. Antitrust agreement decisions rarely rank plus factors according to their probative merit or specify the minimum critical mass of plus factors that must be established to sustain an inference that conduct resulted from concerted acts rather than from conscious parallelism. Nor do courts ordinarily devote great effort to evaluating the economic significance of each factor. This ad hoc approach makes judgments about the resolution of future cases problematic and gives an impressionistic quality to judicial decision making in agreement related disputes. “873 Thirdly, the application of indirect (circumstantial) evidences and the Leniency programme for detecting cartels, which ‘generally has secret nature of evidence’ have not been an effective and comprehensive antitrust policy. An ideal Cartel law or policy aims both to provide deterrence effect and desistence impact to collusive practices by undertakings. The application of indirect (circumstantial) evidences and the Leniency programme were only complementary instruments to the cartels detection policy. Accordingly, the Cartel or Competition law Authorities should employ the proactive measures, for instance periodical market screenings focusing upon particular sectors (industries) and/or markets, in order to: identify alleged conduct on the market, determine competition rules violated and know groups of products or services concerned. Moreover, as regards to effective cartel detection policies or instruments, the Cartel or Competition law Authorities should take into considerations the following principles: First, they supposed to have potential capability to detect and deter cartels. Second, they could not be easily circumvented. Third, they shall take into consideration institutional capacities of competition law authorities. Fourth, they are supposed to consider a limited availability of public information. Fourthly, in the Indonesian Competition Law, the implementation of circumstantial evidences creates a contradiction and legislative overlapping particularly with the rules of evidence in Article 184 section 1 873 Stroux, EC and US Oligopoly Control (n 51) 54–55. 4.3 Chapter Interim Result 291 of the Indonesian Criminal Proceedings Code (KUHAP) and Article 1866 of the Indonesian Civil Code (Burgerlijk Wetboek – KUHPerdata).874 KUHAP and KUH Perdata provisions acknowledge the clues or indicators which correspond to circumstantial or indirect evidences. Nevertheless, for the District Court, this kind of evidence has insignificant evidentiary values and asserted that a mere evidentiary instrument is not an admissible evidence before the court in accordance with the unus testis nullus testis principle.875 However, the Indonesia Supreme Court (MARI) Decision No. K/Pdt.Sus/2009 stated that “In Competition Law Perspective, a violation of the law could be based on some indirect evidence that correlated one another” Moreover, from the business practice point of view, the implementation of circumstantial evidences causes a misleading analysis in the cartel law enforcement. Fifthly, as regards to the possibility of Leniency measure in the Indonesian Competition Law, although the Leniency has not been clearly regulated, the KPPU (the Commission for the Supervision of Business Competition) indeed employs the leniency programme. The legal basis of the KKPU was the Article 35 of the Indonesia Competition Law No.5/1999, whereas KPPU has been authorised to generate necessary legislation for implementing the provisions of the Indonesia Competition Law No. 5/1999, notably with regard to the implementation of the Leniency programme. In addition, by a systematic interpretation of Article 47 of the Indonesia Competition Law Number. 5/1999, which stipulates “The Commission is authorized to impose administrative sanctions… “, KPPU is able to implement the Leniency programme for cartel infringement. 874 The Indonesian Law No.8 year of 1981 on Criminal Procedural Law (‘KUHAP’) and the Indonesian Civil Code (Kitab-Undang-undang Hukum Perdata 1848). 875 Hukumonline, ‘Proving Cartels Requires Extensive Investigations’ ‹http://en.huku monline.com/pages/lt4f1e5c482a5e9/proving-cartels-requires-extensive-investig ations› accessed on 05th May 2012. Chapter Four Conceptual and Judicial Praxis 292

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Abstract

Notwithstanding the two decades that have passed since the implementation of Law Number 5 on the Prohibition of Monopolistic Practices and Unfair Business Competition in 1999, the Indonesian Competition Authority or Komisi Pengawas Persaingan Usaha (“KPPU”) continues to face profound difficulties in uncovering cartel activities and thus in imposing penalties. Therefore, the KPPU strives to use circumstantial (indirect) evidence in its judicial practice to prove cartel transgressions. In German Cartel Law, EU Competition Law and in the US Antitrust practice, the courts also employ indirect (circumstantial) evidence, namely ‘facilitating practices’ and ‘plus-factors’, to substantiate cartel infringements. This book compares the different approaches to implimenting indirect (circumstantial) evidence in the Indonesian Competition Law to the German and European Competition Law, both from a procedural as well as a substantial law perspective.